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Credit Suisse: bank destabilised as Horta-Osório fails Wimbledon test

António Horta-Osório joined Credit Suisse as chair to rebuild its crumbling reputation. He is leaving his mark — in exactly the wrong way. The former chief executive of Lloyds has resigned after breaching UK and Swiss coronavirus rules. Notably, he attended the 2021 Wimbledon men’s tennis finals, won by vaccine sceptic Novak Djokovic.

Credit Suisse has supplanted Deutsche Bank as the European lender that can get nothing right. Its catalogue of disasters includes a spying scandal, the collapse of invoice lender Greensill and the implosion of hedge fund Archegos Capital. Credit Suisse has also failed to capitalise on the powerful rebound for investment banks since March 2020. Shares trade at just half book value, compared with the 0.8 multiple for European banks.

Horta-Osório had just the right mix of diplomacy and toughness to stabilise Credit Suisse as a hands-on chair. But a penchant for occasional but serious lapses of judgment has let him down. Public figures cannot appear to disregard Covid safety, as the woes of Djokovic and UK premier Boris Johnson illustrate.

Axel Lehmann, a UBS executive, will replace the Portuguese banker. Rumours are circulating of a Swiss-led coup after some bumpy years under foreign bosses. That seems unlikely. Horta-Osório had pushed for Lehmann to join the board.

It is true that Horta-Osório had been dipping into the remit of Swiss chief executive Thomas Gottstein, a steady, conservative figure. A lack of direct experience in private and investment banking was a handicap for the ex-Lloyds executive here. Lehmann’s own background is in personal and corporate banking.

Infighting among Credit Suisse executives could not have prevented necessary fixes, though. Investment bankers are unlikely to have sought to protect the defunct prime brokerage unit following the nearly $6bn hit (so far) from last year’s Archegos scandal, thinks Berenberg.

The share price fell 5 per cent when Horta-Osório announced his plans in November. Investors had hoped for a more aggressive strategy. They want some of the bank’s SFr1.1bn ($1.2bn) excess capital returned to them, not held back for restructurings. Credit Suisse plans a meagre 25 per cent dividend payout, when so many banks are upping theirs. That plays poorly with shareholders, Citi points out.

Lehmann and Gottstein therefore need to go further. They have the blessing and curse of a thoroughly destabilised bank to work with. Their biggest challenge — rocky markets aside — will be to dispel suspicions among foreign investors. They may see Lehmann, rightly or wrongly, as a consensual local appointee, hired to steady the business to the satisfaction of its executives.

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